How to Terminate a Contract With a Real Estate Broker

Contracts are legally binding, but can be terminated under certain conditions.

Standard real estate agent contracts include clauses for opting out of the agreement; additionally, you are legally able to terminate the contract if you can prove that the agent is not honoring his contractual duties. Standard California real estate contracts outline how to legally terminate the contract. Depending on your reasons for terminating the contract, breaking the contract could be very simple or somewhat of a headache. With the right background knowledge, however, you can make the entire process go much smoother.

Residential Listing Agreement

The California Association of Realtors Residential Listing Agreement has a clause titled Cancelation of Listing. This may be automatically set forth in the contract. There may be a cancelation or termination fee for early termination. In some cases, the agent may have included a compensation clause that allows them remuneration through escrow on the sale of the home. Keep this in mind when terminating as it affects your bottom line profits.

Talk to Your Real Estate Agent

Explain your situation to the real estate broker. Depending on the situation, it may actually be beneficial for her to terminate the contract too. Any contract can be terminated if both parties agree to the termination. For example, if you have decided that you do not want to sell your home, then the broker will almost always agree to cancel the contract. There is no point for the real estate agent to spend time and money promoting your home if you are not fully committed to selling. However, if you are simply not satisfied with the agent's services, then she may not be as eager to break the contract.

Find Contractual Basis

Study your contract carefully, looking for opt-out clauses. When working with a large, nationally recognized real estate company, you can often opt out of a contract at your discretion, provided you agree to sign a new contract with a different agent in the same company. This is a good option if you trust the real estate agency but are unsatisfied with your individual agent. Additionally, many contracts have procedures in place to allow for contract termination if grievances are reported and not remedied. In other words, you must tell the real estate agent what you are dissatisfied with. The agent will then have a predetermined duration of time to remedy the situation; otherwise you will be allowed to terminate the contract.

Look for breaches in contractual obligations. If you are unable to simply reason with the broker or find an appropriate opt-out clause, then you will need to find evidence that the real estate agent has not performed his required duties. According to the California Department of Real Estate, the only way to cancel a contract without the consent of both parties is if there has been a breach of contract. Most contracts outline the duties of the real estate broker. For example, the contract may say that the agent must show the house a certain number of times per month, or that a specific number of promotional ads must appear in the local paper. If the agent does not fulfill these contractual obligations, you can legally break the contract.

About the Author

Richard Kalinowski began writing professionally in 2006. He also works as a website programmer and graphic designer for several clients. Kalinowski holds a Master of Fine Arts from Goddard College and a Bachelor of Science in education from the University of Wisconsin-Whitewater.